In a recent
Dilbert cartoon, the boss asks the employee, “Will there be any unforeseen
problems?”

Ah, if only we
could foresee the unforeseen.

Certain things we
are able to foresee with some certainty.Take
greed:without it there would be no
scandals, no steady stream of misdeeds, and writing these letters would be that
much more difficult.It seems that
every quarter there is another indignity heaped upon the investing public.They serve to lubricate my keyboard and they provide fodder for
humorists.

The miscreants du
jour are the mutual funds.Large,
previously well-regarded firms like Putnam, Janus, Strong, Invesco,
Pilgrim-Baxter, Alliance, Federated and others have been caught in actions that
are often illegal, and when not technically against the law, are certainly
morally unsupportable.

Among the
investing public there are a number of other foreseeable traits upon which we
can depend.For example:

The natural human
tendency is to believe that whatever conditions currently exist will continue to
exist.That is, when markets are
going up, we think they will go up forever.

We tend to
believe that if we are making money in a particular security that we will
continue to make money in it.

We tend to
believe that if we lost money in a particular investment, that it will never be
a good investment, and that we are likely to lose money again should we ever
dare to venture into that same security.

These are
emotional reactions, and they are neither rational nor true, but, like greed,they are a universal human trait.

Of course, the
best we mortals are likely to be able to do is to foresee possible pitfalls and
try to insulate ourselves from them.We
also try to foresee possible beneficial items and profit from them.

And then, of
course, we run into the unforeseen problems.

Thus far, the
markets have been able to shrug off the scandals, the falling dollar and the
rising public debt and go on to record very healthy gains for the year.Both bonds and stocks were strong in the year just ended, across the
board, with the more speculative elements in each category providing the most
dramatic gains.

The economy seems
to be picking up steam, and, at last, jobs.It is no wonder, what with our government pumping cash into the system,
holding interest rates at very low levels and employing many thousands of our
youth in military positions.

Actually, the
wonder is that it took so long to grab hold.The question is whether the gains in the economy, and by extension the
markets, can continue.

I am not sanguine
about the new year.I am as
vigilant and concerned as ever.But
as I have said on many occasions, it is my job to worry.I just hope there will be no unforeseen problems.